Wednesday, December 19, 2012

NASA says there is no credible evidence that the world will
end when we cross to the other side of the galactic alignment in a couple of
days. But will we experience something
worse than Y2K? Will the earth’s
magnetic poles reverse, rendering our electrical grid obsolete? Quant doesn't do astrophysics or electrical engineering
but its biggest mover today may be a favorite among the Preppers stocking their
bunkers. The Powershares WilderHill Progressive
Energy Portfolio (PUW) gained 341 positions overnight into Quant’s 70th
place rank.

Moves like that are usually confined to the lower ranks and
are driven by spikes in various sentiment measures. PUW did see a rise in its Sentiment Score
from 41.4 to 54.8 but its rank today is driven by an overnight jump in its
Technical Score from a lowly 32 to a respectable 68.6 with all three time
frames seeing strong gains. Those gains
can be explained with a look at its chart that shows the fund preparing for a
breakout from a multiyear downtrend. The
constituents listed on its tear sheet make products in the areas of alternative
energy, better energy efficiency and new energy activity. They are currently trading at levels that
give PUW a decent Fundamental Score of 69.8, although that is down from recent
levels as the fund has been performing better.

We will be watching what happens to that 70th place
rank if Friday’s chance of showers weather forecast for Wall Street is correct
and the apocalypse doesn't happen. If Preppers
emerge from their bunkers Saturday morning and find they are alone with the cockroaches
and the few remaining Twinkies, it won’t matter what ETF they purchased today. But how will this fund look if the world
looks the same Saturday? Maybe it will
drop back down into Quant’s bunker. But
maybe its move up today has nothing to do with astrological cycles or Mayan
predictions. Maybe it has more to do
with expectations that the Republicans will revert to form and give President
Obama everything he wants, fueling the tanks of these green energy companies
for the next four years. We like to say
that Quant moves in mysterious ways but when a fund gets to the double digit
ranks, it has a good chance of outperforming the market over the next few months. Assuming of course we don’t all get sucked
into a black hole. We hold no such
assumption and are continuing to prepare for Christmas and a prosperous 2013,
Quant will help with the latter.